Plane engines are extremely highly optimised, and the design margins are basically at the limit of what regulations allow, which is IMHO why the tiniest of errors can have huge consequences. However, in this case it sounds like the manufacturing process was such that it invited misalignment:
Finally, working from the inside through the inner hub counter bore, the stub pipe counter bore would be drilled to a specified depth to accommodate the filter. (This was the bore that was later found to be offset by half a millimeter.)
Why not machine the stub pipes to their desired dimensions, including the drilling, and then install them? That way, no in-situ drilling, with that accompanying risk of misalignment, would even be necessary. Even if they decided such drilling was unavoidable, a drill with a pilot (no pun intended) would've kept the holes as concentric as needed. (Disclaimer: Not a professional machinist; but have done some lathe and mill work.)
The temperature inside this buffer space was likely between 365 and 375˚C, well above the 280-degree auto-ignition temperature of the engine oil, so the spray immediately ignited.
It's worth noting that due to fire risk, most planes use non-flammable hydraulic fluid, although it's not without its own dangers, so perhaps non-flammable engine oil was considered but ultimately decided against: https://en.wikipedia.org/wiki/Skydrol